Klondex Mines Ltd. released an update on the company's exploration and
project development activities at its True North Gold mine, which was
formerly known as the Rice Lake mine, in Manitoba, Canada. The company
acquired the Canadian asset in January 2016.
Klondex
Mines Ltd. (KDX:TSX; KLDX:NYSE.MKT) reported that project development activities continue to advance and
are on schedule and within budget. The company expects to release a mineral
resource update by the end of the third quarter and to make a production
decision after that.
Jamie Spratt, an analyst with Clarus Securities, in his June 16 research
report, notes that Klondex "offers a unique mix of low-cost production,
internally fundable production growth and credible management." The
long-hole stoping test program is "giving positive results with two long
hole test stopes completed to date in the Cohiba zone."
The True North project is expected to recover between 8,000 and 12,000
ounces gold in 2016 through a combination of test stope mining and tailing
reprocessing. Spratt says that because the recovery will be through
reprocessing tailings and test stope mining, "minimum capital investment
will be required."
Spratt expects "companywide production of 145 Koz Au eq at an AISC of
US$850/oz in 2016, "rising to 200 Koz Au eq in 2017, "a compelling
37% production growth." He also expects "an uptick in production in
H2/16 driven by higher grade and throughput at both Midas and Fire Creek that
should also lead to lower costs." The Midas and Fire Creek projects are
located in Nevada. True North is the company's only Canadian operation.
Spratt believes the "current valuation for Klondex is not reflective
of its low-cost production and growth profile."
Philip Ker, an analyst with PI Financial, has focused on Klondex's
rebranding of its Canadian operations. He believes that True North's
8,000-12,000 ounce gold 2016 production will "offset capital costs
associated with revamping the operation from care & maintenance."
Klondex, notes Ker, is moving ahead with True North exploration: "In
the near term, Klondex expects to continue to target infill drilling on the
710/711 zone and commence its bulk sample in the 710 zone in July."
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